REITs - Real Estate Investment Trusts - Info &amp; Discussion

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Top 192. Apr 9, 2002 7:31 AM

» Wren101 - REITs continue to set new highs

Despite warnings of declining fundamentals, the RMS index is setting new high after new high.

One explanation is that investors have become aware that REITs offer good current dividend income and an outlook for reasonable appreciation. Many advisors are picking up on the Warren Buffet and Bill Gross line that stock market total returns for the next several years will be single digit. REITs have the potential to pay a 5 or 6 percent dividend (some higher) and appreciation in the 3 to 4 percent range (some higher). A lot of new money is pouring into REITs.

Some think that there will be a dip in the second half.

Who knows???

-- posted by Wren101

Top 193. Apr 9, 2002 8:54 AM

» JenL_2 - Re: REITs continue to set new highs

In response to message posted by Wren101:

Hi Wren - welcome to the group! Yup this chart tells the story also:

<img src="http://chart.bigcharts.com/bc3/intchart/..." width=579 height=335>
RMS & S&P500 3 YR Chart

....but now is it the time to get into REITs or into the S&P500?......Jen

-- posted by JenL_2

Top 194. Apr 9, 2002 9:19 AM

» Kirk - Re: Re: REITs continue to set new highs

In response to message posted by JenL_2:

My only worry is that if the Bears are right.. then the bear started in 1998 when most stocks were hit except large cap tech where money flow went. Then that was hit and the performance chasers went after dividend paying stocks and real estate.

IF we really have a major bear ahead, then the real estate bubble will deflate and the dividend stocks might have to cut dividends...

To me, it argues for a fully diversified portfolio unless you understand the risks in performance chasing of sectors.

-- posted by Kirk

Top 195. Apr 9, 2002 12:27 PM

» walkerman - Re: Re: Re: REITs continue to set new highs

In response to message posted by Kirk:
My thought on that is that if real estate was going to get hit, it would already have been hit in the bay area, esp. sili valley, because that area got slammed when the tech bubble burst. From what I hear, property is still going up there.

-- posted by walkerman

Top 196. Apr 9, 2002 3:53 PM

» DellaO - Re: REITs continue to set new highs

In response to message posted by walkerman:

Walkerman, You are correct. The bubble did burst here--at least as much as it ever does. Some properties declined into the area of 20-25% drop. But now real estate is on the move again and supply is dropping.

As Brinker once pointed out, people want to live in the Santa Clara Valley, SF and Monterey Bay areas--no matter what. Reason? It is the best place in the world to live.

The question is, will this be true in other areas where diversified REITS hold properties.

-- posted by DellaO

Top 197. Apr 9, 2002 4:03 PM

» KLR - No evidence that housing prices in for Nasdaq-like dive

'Bubble' purveyors deserve a pop
No evidence that housing prices in for Nasdaq-like dive

By Steve Kerch, CBS.MarketWatch.com
Last Update: 12:07 AM ET April 9, 2002

CHICAGO (CBS.MW) -- Misery sure has been angling for some extra company lately.

It seems an awful lot of people burned by their overblown zeal for the "new economy" want to comfort themselves with the prediction that housing prices, too, will deflate like a punctured dot-com stock.

The problem is that any evidence of this so-called bubble in housing prices is as nonexistent as the earnings of the $100 companies now trading for a dime.

"All the numbers we are seeing point to a good balance of housing supply and demand in most of the country," said David Seiders, chief economist of the National Association of Home Builders.

"Fear of a pricing bubble would drive people back into stocks -- which Wall Street would surely love -- but it is just not the case," Seiders said Monday in a joint forecast with the National Association of Realtors.

Sure, the builders and Realtors are pretty much paid to keep the sunny side up when it comes to the housing economy.

Mortgage mavens

But a top-tier lineup of executives from the secondary mortgage market was equally optimistic publicly at a gathering Monday in Chicago.

"Though we've had home-price appreciation in the '90s that was excellent, and in the last few years has outstripped income growth, over the longer period of time those increases have just mirrored income. We don't have bubblish behavior," said Jamie Gorelick, vice chairman of Fannie Mae. (FNM: news, chart, profile)

And even in private, where they are more likely to admit to misgivings, these industry leaders maintain that the fundamentals in no way suggest housing prices or housing activity will show any significant declines.

"We had the perfect calm in the mortgage industry in the last five years -- the ideal credit market," said Paul Peterson, executive vice president of Freddie Mac's (FRE: news, chart, profile) single-family business.

"There is no reason to believe even if things are great in the economy that it will be as good as the last five years. But there is still more good news out there than bad," he said.

Alex Pollock, president of the Federal Home Loan Bank of Chicago, said the notion of income and housing assets is key, since "lending on homes is essentially lending on the national income."

"And it looks like we're in fairly good shape in most places, except in high-end areas like Silicon Valley where the expectations of the income are no longer there," he said. "That kind of bust has happened before in different housing sectors, but it doesn't look close to that now."

Poor perspective

Just because things got out of whack in Silicon Valley doesn't mean they did any such thing in Sioux City. In fact, despite the perception of some that housing prices have soared out of proportion, prices actually accelerated at a faster pace in the 1980s than they did in the '90s, Gorelick said.

And not coincidentally, it was during the last downturn in the early '90s that there also were dire forecasts of housing prices tanking. One national business weekly published a fanciful cover illustration showing houses marching off a cliff like lemmings.

Oops. Never happened. And in the few markets where prices may have temporarily slid, notably a handful in the Northeast and Southern California, the correction was short lived.

Today's predictions of housing doom seem equally calculated to sell papers or tease television shows.

But once those stories have faded, housing's demographic foundation, the one that has made this long, good run possible, will remain intact: The multitude of baby boomers entering their prime move-up and second-home buying years, the influx of immigrants who join the homeownership parade more quickly than past generations and the continued ascent of minorities in the market.

"You always need to go back to the fundamentals," said David Lereah, NAR's chief economist. "With the economy growing, the job market rebounding and mortgage rates staying relatively low, we see the housing market staying healthy through 2003."

On the pivotal interest-rate question, Seiders and Lereah both forecast that mortgage rates will rise only marginally, moving toward 7.4 percent by the end of 2002 and 7.7 percent for 2003.

No end of customers

Nicholas Retsinas, director of the Joint Center for Housing Studies at Harvard University, said one of the questions he is asked most frequently is this: Why are people still buying so many homes?

"I think people have looked at what happened to the stock market and looked at where the real wealth-building has been in this country and it's been in the home," Gorelick said.

"It's nesting -- 21 percent of all expenditures by consumers last year were put into people's houses -- and that trend will continue," she said.

Too much sunshine for your? Well, even though the home-price bubble is a phantom menace, there are portents of problems on the horizon. We'll take those up next week.

-- posted by KLR

Top 198. Jun 26, 2002 10:18 AM

» CaptRon - Fallout from WCOM on REITS

Good article from CE on WCOM leases:
(BTW, is the WCOM thread MIA?)

Christopher Edmonds
Worldcom -- REIT Exposure
6/26/02 10:18 AM ET

Lots of talk about the exposure of financial institutions to WorldCom (WCOM:NYSE), so lets dig a little deeper -- how about the exposure of REITs to WorldCom leases. (A big thanks to Christopher Haley, director of REIT research at Wachovia and a member of the TSC REIT Roundtable for his help on this...)
At the top of the list is Highwoods Properties (HIW:NYSE) with 3.9% of its annualized base rents (ABR) coming from Worldcom, 2.9% of which is with Intermedia Communications a WCOM subsidiary. HIW holds a total of 17 leases with WCOM and Intermedia is HIW's second-largest tenant as measured by base rents.

Second on the list is Parkway Properties (PLY:NYSE)with 2.4% of its ABR coming from WorldCom. That amount was reduced when two leases expired in Q12002. However, it is important to note that Jackson, MS is Parkway's HQ and a significant market for the company. Parkway has 836,000 sq.ft. of leasable space in Jackson, its third largest market comprising 9.42% of its portfolio. (Parkway' largest market is Houston.)

Jackson is also WorldCom's HQ and much of the professional services infrastructure of Jackson has depended on WCOM. Hence, one REIT fund manager suggested that the impact of WCOM's plunge on Parkway could be much greater than just the direct link.

Other real estate companies with exposure over 1% of ABR are Prentiss Properties (PP:NYSE), 2.0% and Catellus (CDX:NYSE), 1.5%. In addition, Reckson Associates (RA:NYSE) has significant WorldCom exposure in the Westchester, NY submarket, but Reckson does not provide specific tenant information. However, Haley notes Reckson's exposure to WorldCom has "a high likelihood of materiality" indicating WorldCom is a top five tenant in Reckson's portfolio.

None

-- posted by CaptRon

Top 199. Jul 2, 2002 11:57 AM

» CaptRon - FWIW, I'm long NLY here:

FWIW, I'm long NLY here:

http://www.siliconinvestor.com/research/...

Dropped recently on UBS downgrade, paying .68
this quarter to shareholders of record 7/3.
History of increasing Dividends.
Trading in 18 area = appox 14.8% ann yield...
News background here, IF you can believe source:
http://www.siliconinvestor.com/research/...

Not recommendation, and don't buy it without doing you own research

-- posted by CaptRon

Top 200. Jan 1, 2003 2:36 PM

» Jaybird248 - Health Care REITs

Happy new year, guys!

Recently a local radio guru said take a serious look at healthcare REITs for income with minimal risk to growth, as med building tenants seldom move. He suggested HR and HCP. Also said to look at TMA, a mortgage backed REIT paying ll%+.

Any feelings about this trio? Any feelings about how they'd be impacted by rising interest rates?

Thanks!

-- posted by Jaybird248